Quality Control: How To Respond To "Just Give Me a Dashboard!" By Frank Buytendijk | Sep 1, 2005 12:00 PM Buzzwords such as "dashboard" are currently exerting a great deal of attraction for my clients. Most everyone who's working to improve their company's performance management systems (which Gartner refers to as corporate performance management, CPM, rather than BPM) seems to be considering implementing data visualization tools that show, at a glance, how well the organization is meeting its goals. The IT and business communities are well aware of these technologies and expect great results from them. But many companies put too little thought into the development of dashboards.   Although the business value of displaying key performance indicators (KPIs) in a dashboard format is widely accepted, the circumstances under which such a tool delivers the most value are not widely understood. Vendors make the problem worse by promising results in just hours or days. Clients considering buying or building dashboards frequently say to me, "I need a quick way of presenting strategic performance indicators for my top management." The demand by business managers to receive a dashboard -- any dashboard -- as quickly as possible is often shortsighted and counterproductive. But the request provides an opportunity to get it done right. Finance and IT must argue against moving forward with incomplete, poorly considered dashboard initiatives because the failure of such a project could harm the prospects for future business intelligence and CPM efforts. They must be prepared to redirect the "Just give me a dashboard!" demand into a more constructive discussion. Learning From the Past The demand for better management information hasn't changed much over the past two decades. In the 1980s, executive information systems (EISs) attained great popularity by promising to meet executives' need for accurate data about the performance of the business. Unfortunately, most EIS systems failed because their maintenance was too expensive to justify for the relatively small number of users who valued the information they provided. Their usefulness was limited because they were not integrated with the company's other reporting streams. Management viewed them as offering just one more set of data that had to be reconciled with other metrics and observations. As a consequence, these systems seemed to complicate matters, rather than providing clarity for decision-making. The business need for quality information hasn't changed appreciably since EISs were popular, but two circumstances today boost dashboards' value. First, the business case for dashboards is easier to make. The technology required for a dashboard is much less expensive than EISs were, and today's dashboards are much easier to deploy to a large number of users, which mitigates the risk of running a pilot project. Second, dashboards today have the potential to truly simplify information for senior management, instead of adding to the confusion. The methodologies for managing performance are much clearer; they include the Balanced Scorecard, Six Sigma, and activity-based management. These concepts help companies identify the metrics executives actually need and avoid inundating them with information they don't need. Setting the Right Scope Unfortunately, the failure of EISs 15 years ago seems to be far from the minds of managers demanding dashboard solutions today. Most of those who lived through the EIS craze have forgotten the lessons learned, and younger managers were never exposed to them. Inquiries about today's dashboards sound very similar to requests for EIS systems two decades ago. The wrong response from finance and IT could doom a dashboard to the same fate as its predecessors. One problem with many dashboard projects is that although executives ask for a "strategic" tool, they also want it to be "simple" -- and they want it immediately. They usually allot a very small budget to the project, as well, because they don't want to fund an expensive business intelligence initiative that may not generate ROI. This attitude leads to a misalignment between expectations that are high and strategic in nature and results that are limited and tactical. Another common problem is that executives seek individual metrics that seem important, rather than developing a system of metrics in a complete Balanced Scorecard framework or strategy map. Managers who are impatient with the timeline required to design a quality dashboard end up with metrics that don't present a clear picture of corporate progress. In addition, many dashboard project managers avoid sharing results with the broader management team and keep costs to a minimum so that they can sail along below the organization' s radar screen. This is a valid strategy for initially testing the applicability of the dashboard concept, but if the initiative doesn't graduate beyond a "proof of concept" style project, the resulting system will not provide optimal performance. Companies focused on implementing the fastest and cheapest solution possible are not helped by CPM software vendors that encourage use of their products to complete a dashboard within a week or to choose KPIs within a few hours. Defending Against Misguided Managers Even when senior managers approach dashboards with skewed expectations, finance and IT staff should embrace their desire for such a system. A request for a dashboard is a sign that executives realize they need better management information. The resulting project can be an excellent test of which corporate data is readily available at high quality and which data is entered manually and fragmented. The project team can use a strategy map to evaluate how complete and predictive a company's management information is. In that sense, the dashboard initiative itself can function as a performance indicator by showing the auditability, speed, quality, and alignment of the information that's reported to top management. Assuming that some trouble spots appear in the review of the quality of management data, the dashboard development process should include the following activities: Properly define corporate metrics. Defining the right metrics is a collaborative process, and the discussions it entails can lead to a common understanding companywide about which KPIs are most important and how they relate to one another. The process starts with the executive team clarifying corporate strategy, determining the contribution that business units will make to that strategy, assigning project "owners" to supervise performance, and agreeing on a set of KPIs. But executives' definitions of metrics should allow room for clarification and refinement. Metrics shouldn't be imposed from the top down, either by management or by outside experts. That's a recipe for setting unrealistic targets, which almost always leads to failure because staff will find ways to evade performance measures they oppose. In contrast, when all of an organization' s stakeholders engage in a collaborative process that is initiated and led by management, then facilitated by a project team, they create conditions favorable to operational alignment throughout the company. And, after all, operational alignment is one of the objectives of a management dashboard. Over time, companies should improve on their first set of metrics, refining the KPIs through a process I compare to peeling an onion, so that they eventually reach the core of the matter. Metrics that are not linked to objectives -- and objectives that are not linked to strategy -- are not useful. The groundwork required to select the right set of metrics is an integral part of any dashboard implementation project. Consider metrics holistically to ensure you've selected the right ones. Organizations that don't use a framework such as the Balanced Scorecard to make sure their set of metrics is coherent can't expect to achieve value other than anecdotal indications of performance. To be predictive, metrics must be considered in the context of a strategy map, a cause-and-effect diagram of the relationships among objectives -- or, at a level of greater detail, among KPIs. Without a strategy map, a dashboard is nothing more than a means of visualizing uncoordinated metrics. Give data management as much attention as it needs. Dashboards are always easier to create for companies that have already implemented a solid data warehouse infrastructure. This simplifies the integration of the needed data and its aggregation to the relevant levels. The dashboard is, after all, nothing more than the most aggregated level of corporate data. Some vendors' software demos assume that customers have a good grasp of the KPIs that would be most beneficial to their business and that all the necessary data is already available and is both integrated and cleansed. This is seldom the case. Eighty percent of the effort behind most scorecard or dashboard initiatives consists of defining the metrics and finding the right data. In this regard, the lack of a budget for a dashboard initiative can actually work to a project team's advantage. Low funding may direct attention to the organization' s need for a comprehensive business intelligence and data warehousing strategy. The result of an effective business intelligence strategy is that the top layer -- the performance indicators in a dashboard -- can be automatically derived from the lower levels of information that the company already has available. All of the necessary data is there; the dashboard project simply aggregates it to one more level. Gain the buy-in of managers throughout the company. The support of middle managers is crucial for translating a CPM strategy into action. The people in this layer of the organizational chart are responsible for the activities that bring corporate strategy to life. In my experience, whenever a CPM data-visualization tool provides basic drill-down capabilities, usage at the middle-management level takes off. The drill-down of KPIs into relevant breakouts provides tactical information that convinces middle management of the dashboard's value. Yet middle management is often the group within a company that most actively resists CPM.. Business managers frequently fear that new reporting mechanisms will somehow expose them or threaten their power. One strategy for obtaining their buy-in is to cite the pressures that surround corporate compliance audits. Sarbanes-Oxley provides plenty of justification for simplifying reporting streams into "one version of the truth." Dashboard project leaders can also put the matter to managers in a more positive light by building a business case for sharing management data with many different stakeholders. Before the organization can assemble such information, all contributors of corporate performance data will have to examine their processes and develop controls to ensure that the information is accurate and timely. Putting together a top-quality performance management dashboard isn't easy. Managers often expect a new tool to be a panacea, when technology actually is the least of their problems. The key to success is strategic alignment -- one version of the truth, with dashboards thoroughly integrated into management processes. The best dashboards are free; they're nothing more than the last step of aggregation of a well-defined set of metrics and management reports. If management demands a dashboard, treat it as a chance to pursue a complete business intelligence strategy. Frank Buytendijk is vice president of corporate strategy for Hyperion. He helps drive strategic direction for Hyperion worldwide. Before joining Hyperion in early 2006, Buytendijk was a research vice president with Gartner.

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